A year without Europe proved costly for the Devils

Manchester United’s revenues fell year-on-year by £38 million, caused by the club’s absence from the lucrative Champions League.

English football giant Manchester United has learned the price of one of its worst seasons in decades. The club’s management published the financial results for the 2014/2015 season, in which the “Red Devils” did not take part in any European competitions — neither the Champions League nor the Europa League. The result was a year-on-year drop in revenue at Old Trafford by £38 million, an 8.8% decline. For comparison, in the previous accounting period ending 30 June 2014, Manchester recorded revenues of £433.2 million, while this year it was “only” £395.2 million. “It was to be expected that the absence from the lucrative Champions League would also be reflected in the financial results. However, it should be said that a one-off failure will not significantly shake such a big club,” sports analyst and football agent Jozef Tokos told the Economic Daily.

TV income suffered the most
A closer look at Manchester United’s accounts shows which revenue stream was hit hardest by missing out on the Champions League: TV rights sales, which fell by more than 20%. Ticket sales revenues dropped by 16%. “At least three sold-out home games and the share from TV broadcasts clearly contributed to the lower numbers. The only thing that kept Manchester United afloat were commercial revenues,” said Tokos. These commercial revenues include lucrative sponsorship deals, shirt sales, other merchandise, and the club’s marketing activities. “Sponsorship revenues reached the highest figure in our history,” the club stated in a release accompanying the financial results. From companies like Chevrolet, Aon, DHL, and Aeroflot, the club earned a total of £154.9 million last season — meaning sponsors accounted for 39% of all income. And it is almost certain these will grow even more in the coming years.

Half a billion in play
Club executive vice-chairman Ed Woodward did not dwell on last season’s disappointment when evaluating the financial results, instead tempting fans with optimistic expectations for the current one. “Looking ahead to the new season, we are full of enthusiasm given our strong position both on and off the pitch,” Woodward told the club’s official website. Not only is Manchester United now back in the Champions League and near the top of the domestic league, but it has also begun to cash in on the most lucrative shirt deal in history. The contract with Adidas will bring in £750 million over ten years — roughly three times the value of the previous deal with rival Nike. Thanks to sponsorships and sporting success, the management expects revenues this season to exceed half a billion pounds. If achieved, Manchester United would become the first English club to cross this threshold. “We are confident that in this season we will continue to grow financially, as all the necessary conditions are in place,” Woodward said.

Real Madrid within reach
If Manchester United’s management’s expectations are met, the club could soon become the highest-earning football team in the world. It is on track to replace Spanish giants Real Madrid at the top of Deloitte’s Football Money League for the first time in a decade. Real’s record revenues currently stand at £513 million. “It probably won’t happen next year, but the day will come when an English club overtakes the famous Real in earnings,” said Tokos. In addition to the financial strength of the Premier League, full stadiums, and Champions League participation, clubs from the British Isles also benefit from the falling euro. That is why the Economic Daily quotes sums in pounds — Deloitte’s rankings are calculated in euros, which leads to a curious twist. While Manchester United’s revenue in pounds was down £38 million year-on-year, in euros it would actually have been up by €1 million compared with 2014. “The fall of the euro in recent months is another factor favouring English clubs,” added Tokos. Deloitte uses the average annual euro-to-pound exchange rate to 30 June, the end of the football financial year. While last year the pound was worth €1.195, in June 2015 it averaged €1.313.